Moorman Corporation has an activity-based costing system with three activity cos

Question

Moorman Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs consist of equipment depreciation and indirect labor and are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation totals $63,000 and indirect labor totals $2,500. Data concerning the distribution of resource consumption across activity cost pools appear below:

Processing Setting Up Equipment depreciation Indirect labor 0.55 0.40 0.15 0.30 Other 0.30 0.30 Required: Assign overhead costs to activity cost pools using activity-based costing Activity Cost Pools Processing Setting Up Other Total Equipment depreciation Indirect labor Total

Explanation / Answer

Activity cost pools Processing Setting up Other Total Equipment depreciation (Processing=63000*0.55, Setting up=63000*0.15, other=63000*0.30) 34650 9450 18900 63000 Indirect Labor (Processing=2500*0.40, Setting up=2500*0.30, other=2500*0.30) 1000 750 750 2500 Total 35650 10200 19650 65500

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